The downturn in China is “our” downturn. All the recent happy talk, due to unsuitable extrapolation and nothing more, has melted away yet again. In short, the same trend dating back almost four years now is quite expectedly unaltered by whatever any central bank does or does not do. “Stimulus” is just noise against all that, at best; at worst it actively contributes to the instability of the decline.
"Time is now rapidly running out," warns The Telegraph's John Ficenec as the British paper takes a deep dive into the dark realities behind the mainstream media headlines continued faith in central planning. Sounding very "Zero Hedge", Ficenec warns that from China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.
China, Australia, Brazil, Canada, Sweden - it is beyond us how anyone can declare the crisis isn’t spreading. Be prepared – there are going to be lots of opportunities to both make and lose money. But first, you have to recognize what is happening.
Anyone with any sense for global economic trends ought to be worried. The signs are everywhere of a serious deflationary crisis.
The ongoing deterioration in fundamentals, economics and technicals suggest that risk currently outweighs the potential reward for now. With respect to the technical front, the ongoing deterioration in relative strength, momentum, and breadth, combined with a compression of price action, have only been witnessed at more important market peaks in the past. "Bull markets" do not die on their own. Their death is generally dictated by the onset of an unexpected catalyst that creates enough "panic selling" to spark a liquidation cycle. Does the current situation in China rise to such a level? Maybe. It is an issue we began discussing this past June, and there may be a danger in dismissing the issue too quickly.
The most pivotal importance of China is that it was the world’s latest financial hope. The yuan devaluation shatters that hope once and for all. The global economy looks a lot more bleak for it, even if many people already didn’t believe official growth numbers anymore. Because we’ve reached the end of the line, the game changes. Of course there will be additional attempts at stimulus, but China’s central bank has de facto conceded that its measures have failed. They just hope you won’t notice, and try to bring it on with a positive spin. Central banks are not “beginning” to lose control, they lost control a long time ago. The age of central bank omnipotence has “left and gone away” like Joltin’ Joe. Omnipotence has been replaced by impotence.
There is an economic and financial trainwreck rumbling through the world economy. Namely, the Great China Ponzi. In all of economic history there has never been anything like it. It is only a matter of time before it ends in a spectacular collapse, leaving the global financial bubble of the last two decades in shambles. The resulting deflationary spiral will suck the global economy into its vortex. And Wall Street will go down for the count because this time the Fed will be utterly powerless to reverse the tide.
Chinese Devaluation Extends To 3rd Day - Yuan Hits 4 Year Low, Japan Escalates Currency Race-To-The-Bottom RhetoricSubmitted by Tyler Durden on 08/12/2015 23:23 -0400
The "one-off" adjustment has now reached its 3rd day as The PBOC has now devalued the Yuan fix by 4.65% back to July 2011 lows.
PBOC tries to reassure: *CHINA PBOC SAYS YUAN REMAINS STRONG CURRENCY IN LONG-TERM
As we hurtle toward the absolutely critical months of September and October, the unraveling of the global financial system is beginning to accelerate.
"When all the experts and forecasts agree – something else is going to happen."
China has officially gone the "nuclear" route, SocGen says, and the read through for the global economy is not good. Here's how to profit going forward...
The week's weakness started with the surprise yuan devaluation, but the moves in everythingfrom crude oil to U.S. government debt signal that investors and traders are telling the Fed to hold off for now. Will U.S. policymakers listen? Make no mistake: the Fed marches to its own data-dependent drum. These indicators will only tell you if the central bank has the right tempo to support markets.
Scaremongery... or maybe the whole point, as Obama's former chief economist noted, is to lose reserve status. Take That China!!
When a central bank tells you it’s a “one-off” event you may as well take that as a green light!
For financial asset investors in the U.S. and around the world, the immediate question becomes whether the Fed will now relax its guidance and seeming intention to raise its Fed Funds target. We think the Fed will still raise rates.